Gold rose on Thursday as the dollar retreated, keeping the metal on course for its biggest quarterly gain in nearly 30 years as expectations of U.S. interest rate hikes receded.

The metal is highly exposed to rising rates, which lift the opportunity cost of holding non-yielding assets, while boosting the dollar. Gold fell 10 percent last year ahead of the first U.S. rate increase in nearly a decade in December.

Spot gold was up 0.35 percent at $1,232.90 an ounce. Gold futures for June delivery settled $7 higher at $1,235.60.

World stocks fell for the first time in four days on Thursday as a roller-coaster quarter drew to a close, while the dollar slid to a five-month low against the euro.

Gold, along with other markets, is now awaiting fresh direction from U.S. non-farm payrolls data on Friday, a closely watched barometer of the health of the U.S. economy. A soft reading would bolster the view that rate hikes are not imminent.

"Investors are waiting to push gold higher, they just need to have a good reason for it," ABN Amro analyst Georgette Boele said.

"It could very well be the payrolls tomorrow. As they've been at a very high level for quite a long time, if we get a little bit of weakness, we have another reason (to rise)."

The metal rallied late on Tuesday after Federal Reserve Chair Janet Yellen said the U.S. central bank should proceed only cautiously in raising interest rates.

Gold's 16.5 percent climb in the first three months of this year, its biggest quarterly rise since 1986, was also driven by concerns over global growth, which battered equities and sparked a wave of safe-haven buying.

"A combination of safe-haven demand on the back of worries about China in particular, a scaling back of expectations of further rate hikes from the Fed, and rising inflation expectations ... have been behind the rally in the gold price," Capital Economics analyst Simona Gambarini said.

"Overall real interest rates will remain low, which is what matters for gold."

Higher gold prices curbed demand for the precious metal in Asia this week, with premiums in several major markets taking a hit, traders in the top consuming region said.